Malaysian palm oil futures edged up in thin trade on Monday as investors pinned their hopes on stockpiles having eased further in March, signalling stronger demand for the tropical oil, although a stronger ringgit capped gains.
Traders are looking ahead to Malaysian Palm Oil Board (MPOB) data on March’s inventory levels, due on Wednesday, to help gauge supply and demand fundamentals.
A Reuters poll forecasted Malaysia’s palm oil stocks in March to have edged lower to 2.35 million tonnes as production likely eased 1.2 per cent from a month ago.
Stocks stood at 2.44 million tonnes at the end of February, down from a record 2.63 million tonnes at the end of December.
“The market is kind of slow today prior to the MPOB data, but should be supportive because we’re expecting stocks to reduce,” said a trader with a foreign commodities brokerage in Malaysia.
“Unfortunately we have a strong ringgit today which will make margins turn worse for refiners. Most likely refiners will opt to stay on the sidelines, because if they buy CPO (crude palm oil) the margins will be very negative,” the trader said.
At the mid-day break, the benchmark June contract on the Bursa Malaysia Derivatives Exchange was up 0.9 per cent at RM2,381 per tonne.
Total traded volumes were thin at 9,224 lots of 25 tonnes each, compared to the usual 12,500 lots for the morning session.
Investors are also keeping an eye on cargo surveyor export data due on Wednesday that will reveal Malaysia’s shipments of palm oil products for the first 10 days of April.
Higher demand for refined products in March had helped offset lower crude palm oil shipments caused by a 4.5 per cent export duty implemented for the month. The duty was up from zero per cent in February.
In other markets, Brent crude rose towards US$105 per barrel on Monday as Japan’s ambitious plan to stimulate the world’s third largest economy is expected to enhance liquidity in the markets,
although weak US jobs data kept a lid on gains.
In vegetable oil markets, US soyoil for May delivery rose 0.8 per cent in early Asian trade. The most active September soybean oil contract on the Dalian Commodities Exchange climbed 0.5 per cent.– Reuters
Source : Business Times